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Recession-Proof Investing in Lanzarote

Guaranteed Rental Income

For many buyers looking to invest in Lanzarote property, the ideal property combines three elements: a holiday home to enjoy for personal use; a property that can be let to holidaymakers and generate income; and a sound property investment that will increase in value in the medium-long term and that can be sold for a profit in the future. However, with the current current credit crunch affecting buyers confidence in being able to make mortgage repayments, many buy to let investors feel nervous about going it alone in the holiday let business. However, shrewd holiday home investors are looking to high quality properties that offer guaranteed rental income.

Stress-Free Investing

This type of leaseback programme allows buyers to invest in holiday property without the hassle that comes with letting and managing. Typically, a management company will handle the marketing and renting of the property, and guarantees the owner a fixed rental income in return. This type of investment suits investors looking for a hands-off approach to property investing - all the hard work is carried out by a management/rental company, with the property owner earning a set income for a fixed period, typically 3 – 5 years, sometimes longer. In many cases the rental income may almost cover the repayments on a property that is bought with a 50% mortgage.

Personal Use

Investors are increasingly looking for rental income with personal use, and programmes that offer both are highly popular. Typically, if buyers opt for leasebacks that do offer personal use of the holiday property, in return they are likely to receive a slightly lower yield. The number of weeks offered to owners varies, depending on the programme, but generally owners can have the property for their own holidays for 1 – 4 weeks.

Advice for Choosing

Choose a resort suitable for holiday lets that is close to the beach, shops and restaurants. Choose an upmarket location with strict planning laws that restrict new developments – this will keep demand for resale properties high, which means your property will be more likely to fetch a higher price when you decide to sell. Finally, choose a property that will appeal to discerning holidaymakers: heated pools, wireless internet and a bright, spacious and modern décor. Sea views will be offering an advantage. If the property is not new, make sure it is in perfect condition. If it is an apartment on a holiday complex, make sure the communal areas, pool and reception area are well managed and kept to hotel standard at all times. Ask yourself if you would be happy to pay to stay in the property yourself. Finally, in terms of the guaranteed rental income, programmes that offer short periods of one year are to be avoided as you have no guarantee that you will be able to rent the property after that. Its best to choose programmes that offer at least 2 to 3 years or more as property is a long term investment.

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